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ISCOVER
Jessica Darnbrough
The Reserve Bank of Australia’s (RBA’s) decision last week to keep the cash rate on hold has enhanced the viability of short-term fixed rate home loans, one industry stakeholder has claimed.
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Speaking to The Adviser, Citibank’s head of mortgages strategy, marketing and product, Belen Lopez Denis, said some of the shorter-term fixed rate products are now “incredibly competitive” because of the RBA’s decision to leave the cash rate on hold at 3 per cent.
“Our six-month fixed rate product has an interest rate of 5.24 per cent, which is 25 basis points below our standard variable rate,” she said.
“As such, borrowers who choose to lock into this product now, effectively receive a 25 basis point rate cut – the same rate cut that the RBA failed to deliver last week.
“Best of all, this product is just six months long, so when borrowers come out of the product, they will inevitable be able to revert to a competitive standard variable rate as the RBA is still expected to cut rates again this year.”
Ms Lopez Denis said the product was a win for those who were uncertain about their financial future.
“Our six-month fixed rate combined with our current refinance offer, makes the Citibank proposition very alluring,” she said.
Last week, Citibank vowed to pay $750 to any customer who chooses to refinance with the bank within the next three months.
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